Commodities News & Agribusiness
Food Inflation Bites Despite World Bank’s $30BN Food Security Financing
The World Bank has revealed that domestic food price inflation remains high worldwide, amidst 205 million people facing acute food and nutrition insecurity.
This is despite various interventions and financing responses from global financial institutions such as the World Bank which in April 2022 announced another round of $30 billion financing to boost food security.
It said in its latest Food Security Update that information from the latest month between December 2022 and March 2023 for which food price inflation data shows high inflation in almost all low- and middle-income countries.
This includes inflation levels greater than 5% in 70.6% of low-income countries, 90.9% of lower-middle-income countries, and 87.0% of upper-middle-income countries with many of the countries experiencing double-digit inflation.
In addition, The World Bank said 84.2% of high-income countries are experiencing high food price inflation. The most-affected countries are in Africa, North America, Latin America, South Asia, Europe, and Central Asia.
Making reference to data from the Food and Agriculture Organization (FOA) of the United Nations, World Bank said the benchmark index of international food commodity prices declined for the 12th consecutive month in March 2023.
“The FAO Food Price Index averaged 126.9 points in March 2023 — 2.1% lower than in February 2023 and 20.5% lower than its peak in March 2022.
“The index, which tracks monthly changes in international commodity prices, indicated that a combination of factors, including ample supplies, subdued import demand, and extension of the Black Sea Grain Initiative, contributed to the decrease. In 2019, prior to COVID-19, the FAO Food Price Index stood at 95.1 points,” it said.
Similarly, the impact of Russia’s invasion of Ukraine continues to exert pressure on the global commodities market with especially with the surge so far seen on trade-related policies imposed by countries.
The report further stated, “The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries with a goal of increasing domestic supply and reducing prices.
“As of March 13, 2023, 23 countries have implemented 29 food export bans, and ten have implemented 14 export-limiting measures.
According to the Global Report on Food Crisis 2022 Mid-year Update, up to 205 million people are expected to face acute food insecurity and to be in need of urgent assistance in 45 countries.
World Bank’s Interventions
As part of a comprehensive, global response to the food security crisis, in April 2022 the World Bank announced that it is making up to $30 billion available over a period of 15 months, including $12 billion in new projects.
The World Bank intends to use the funds to scale up short- and long-term responses along four themes to boost food and nutrition security, reduce risks, and strengthen food systems.
The focuses are to support producers and consumers, facilitate increased trade in food and trade inputs, support vulnerable households, and invest in sustainable food and nutrition security.
The World Bank said it has achieved its target of making $30 billion commitment for food and nutrition security response.
“Between April to December 2022, the Bank’s food and nutrition security commitments in new lending have passed the $12 billion mark – with almost half for Africa, which is one of the hardest hit regions by the food crisis.